The power of financial independence

Monday

Feb 18, 2013 at 12:01 AMFeb 18, 2013 at 2:44 PM

Jim Hogsett

In recent weeks, a debate has emerged in North Carolina about cutting unemployment compensation from $535 to $350 per week. In fact, the issue has become such a political hotbed, opponents have asked Gov. Pat McCrory if he could live on that kind of income.

Since the governor may not have experienced unemployment during his life and the question is merely a political ploy, I am pleased to possess the credentials to answer it.

The short answer is ďIt depends.Ē

An individual who has a mortgage payment certainly has more expense than the person whose home is debt free. Those who have been involved in wreckless spending and have high credit card debt will certainly have more difficulty than those who have been wise while working and who have built up an emergency fund.

For those who are unemployed, I will tell you I have lived in your shoes. When the corporation in which I had worked as a corporate training director for 32 years closed, I was placed at the crossroads of my life. Which way do I go? How will I pay my bills without touching my retirement savings?

I had the opportunity to draw $600 in weekly unemployment compensation. But, I refused to take it and obtained a job earning $9 per hour. That was equal to $360 per week and after trimming my expenditures to the bare essentials, I found I could pay my bills without withdrawing money from retirement savings.

Although I hold a bachelorís and masterís degree, I also found myself on third shift cleaning the bathrooms and performing other such required work as a nursing assistant at an assisted living facility. However, I had no reason to grumble because I had found another calling that enabled me to serve precious senior citizens.

Unemployment benefits are justified so long as they are used as a temporary bridge to employment. However, when it becomes an endless stream of money financed by the taxpayers, it becomes another entitlement program at the expense of overall productivity and long-run economic growth.

As people remain unemployed, their decreased spending will slow production throughout the economy, and the system becomes less and less sustainable. In an era of trillion-dollar deficits, we cannot afford such a consequence.

When the amount of the payment is excessive, it becomes too much of a good thing because it can easily become addictive. With many now being able to claim some form of unemployment benefits for well over a year, the pressure to search for a job has eased. Receivers of these benefits can now feel more inclined to take a break from the rigors of countless job searches with the belief that time is finally on their side.

And, those who do not have a work ethic perceive unemployment benefits as a vacation from working. They plan to use the funds until they reach the limit whatever that may be and could care less who is footing the bill.

In addition to the compensation received, the extension of unemployment benefits also inflicts further harm on the unemployed. The longer a person is without a job, the more difficult it is to get another one. That is a statistical fact. And, as workers remain out of the job market for longer periods, their skills become obsolete.

On the other hand, a study by economist Bruce Meyer has revealed thatunemployment insurance recipients are three times more likelyto get a job when their benefits are about to run out. In other words, extending unemployment insurance always runs the risk of inducing long-run unemployment.

In the final analysis, the optimal design of unemployment insurance must consider how the payoff and duration of benefits relative to the worker's previous income affect the individual's incentive to seek employment.

For those who are receiving unemployment compensation and who are upset about the benefit being cut, I know a way to end that aggravation. Find employment and your reliance on Mr. Government will only be a distant nightmare. There is no substitute for financial independence.

If you are having difficulty finding a job, I must ask, have you carefully examined all of your options? For example, if the employment door continues to shut, you may have to move. My ministry has identified plenty of towns and cities in this country where the unemployment rate is less than four percent because the Great Recession never brought harm to these places.

When I was employed by a company which frequently transferred its managers to new locations, I quickly learned that you must sometimes go where the opportunity exists.

Godís Holy Word refers to work more than 600 times and to money more often thanit refersto faith, praying, and love combined. Therefore, we should not be surprised that He says He has plans for us to prosper and grow.

I might add that his instruction pertaining to the Christian work ethic has no association whatsoever with a continual reliance on any federal or state government to feed us.